Will Donald Trump make index funds illegal?

The vacationing Matt Levine brings the awesome; I highlight (bold & underlined) under the rubric of “Economic theory” clear nonsense:

You know how, last month, I mentioned that Donald Trump’s presidential campaign was a blank canvas for the projection of everyone’s wishes, from white nationalists to Fannie Mae privatizers? And you know how, a couple of weeks later, I mentioned a new paper from Eric Posner, Fiona Scott Morton and E. Glen Weyl, arguing that the government should use its antitrust powers to restrict large institutional investors from owning shares of more than one company in the same industry? Can you guess where this is going? Here are Posner, Morton and Weyl on Trump:

He channeled populist anger against elite corporations by, for example, calling the proposed merger between AT&T and Time Warner “too much concentration of power in the hands of too few.”

But the real challenge to competitive markets today does not come from mergers like this one. The great, but mostly unknown, antitrust story of our time is the astonishing rise of the institutional investor …

Oh yes: They argue that Trump, as the champion of the working class, should implement their plan to restrict cross-holdings by institutional investors, because those cross-holdings are bad for workers and consumers:

Vanguard and BlackRock are the largest owners of Apple andMicrosoft, and among the top three owners of CVS, Walgreens andRite Aid. If you zoom down to, say, the market in cooking stoves, you will see that the largest owners of two of the three major competitors — GE, Whirlpool and Electrolux — are Vanguard, BlackRock and State Street. The same patterns appear in airlines, soft drinks, you name it.

Economic theory tells us that when a single investor owns large stakes in competing firms, the investor will want firms to keep prices high and wages low. Price and wage competition lowers profits and stock values.

I will not hold my breath for the Trump administration to crack down on index funds, or to be a vigorous antitrust enforcer generally. But Trump’s apparent policy of picking winners and losers on Twitter does suggest a certain philosophical difference with diversified investors who passively own all the companies in every industry. So maybe he’ll go for this!